The US Dollar Index, which reflects the value of the US Dollar against a selection of six global currencies, is currently positioned around 98.15 during the Asian trading hours on Friday. The DXY experiences slight increases following a hawkish stance from the US Federal Reserve. Market participants prepare for the release of the US ISM Manufacturing Purchasing Managers Index for April, scheduled for later on Friday.

The US central bank, as anticipated, maintained the federal funds rate at 3.5% to 3.75% during its April meeting on Wednesday, signifying a third consecutive pause. During the conference, Fed Chair Jerome Powell indicated that the economic outlook continues to be highly uncertain, noting that the conflict in the Middle East has played a role in this uncertainty. Powell further indicated that the committee believes it is in a “good place” to consider either rate cuts or rate hikes, contingent on the effects of rising oil prices. Hawkish comments from Federal Reserve officials may strengthen the US Dollar relative to its competitors in the short term.

Additionally, persistent tensions in the Middle East and the closure of the Strait of Hormuz may enhance the appeal of a safe-haven asset like the US Dollar. On Thursday, US President Donald Trump reaffirmed his commitment to a naval blockade of Iranian ports, citing worries that the crucial Strait of Hormuz may remain closed for an extended period. In the meantime, Iranian President Masoud Pezeshkian expressed his view that the US naval blockade represents a “extension of military operations” and deemed it “intolerable.”

Nonetheless, the disappointing US economic data could limit the potential gains for the DXY. On Thursday, data from the Bureau of Economic Analysis indicated that the US economy grew at an annualised rate of 2.0% during the first quarter of 2026. This figure followed a 0.5% expansion in the previous reading but was weaker than the anticipated 2.3% growth.